Parliament nod sought for additional spending of Rs 49,715 crore

Government has sought parliament's approval to spend an additional Rs 24,774 crore on oil subsidies in the current fiscal year.

NEW DELHI: The government today sought Parliament's approval to spend an additional Rs 49,715.54 crore mainly to meet the outgo on fuel, fertiliser and food subsidies in the current financial year.

The net cash outgo will be only Rs 40,967.27 crore, as per the Supplementary Demands for Grants tabled in Lok Sabha by Finance Minister P Chidambaram.

The second and final batch of Supplementary Demands for Grants for 2012-13 includes 65 grants and one appropriation.

"Approval of the Parliament is sought to authorise gross additional expenditure of Rs 49,715.54 crore. Of this, the proposals involving net cash outgo aggregate to Rs 40,967.27 crore and gross additional expenditure, matched by savings of the Ministries/Departments or by enhanced receipts/recoveries aggregate to Rs 8,747.29 crore," the document said.

Of the total amount, Rs 9,914.06 crore and Rs 4,753.99 crore have been sought for food and fertiliser subsidies respectively.

Parliament's nod was also sought for spending Rs 24,773.75 crore for providing compensation towards estimated under recoveries to oil marketing companies on account of sale of petroleum products and subsidy to them for supply of natural gas to north eastern region has also been sought.

Besides, a token provision of Rs 98 lakh was sought - Rs one lakh for each item of expenditure - for enabling re-appropriation of savings in cases involving new services or new instruments of service.

The Supplementary Demands for Grants for 2012-13 was also tabled in Rajya Sabha.

The government may have to freeze the diesel subsidy at the current level to protect the budget numbers at some point in time, Chief Economic Advisor to the Finance Minister, Raghuram Rajan, said earlier this week while flagging concerns over the widening current account deficit.

"At some point, we should think about freezing the subsidy on diesel at the current levels until it reaches the level of world prices so that the budget is not exposed to the risks of an increase in global oil price," Rajan told the convocation of the RBI-run National Institute of Bank Management here today.

Terming the widening current account deficit, which had run up to a historic high of 5.4 per cent of GDP in Q2 of the fiscal, as the "biggest concern now," the noted economist said, "CAD is our biggest concern right now because as you finance from outside, you are dependent on the interest of foreign investors. They've been supporting us so far due to the search for yields. But can we continue to rely on that forbearance?"

Finance Minister P Chidambaram, during his customary post-budget interaction with the industry chambers yesterday, had said that CAD is the biggest worry for him now as he could successfully meet the fiscal deficit target at 10 bps better at 5.2 per cent and said the final numbers would be lowest than this too.

As a short-term way out, Rajan said, "In the near-term, we have to focus more on financing CAD through foreign inflows, because reducing it will take time. The best way is to increase exports relative to imports. The problem is that it is also dependent on growth of foreign countries."